Japan’s Prime Minister Yoshihiko Noda at the Asia-Europe Meeting (ASEM) summit in Vientiane, Laos, Nov. 6, 2012. Mr. Noda announced on the weekend his government’s intention to join the Trans-Pacific Partnership talks, creating what will be a key election issue for his struggling Democratic Party which must head to the polls before the summer. (DAMIR SAGOLJ/REUTERS)

Japan’s Prime Minister Yoshihiko Noda at the Asia-Europe Meeting (ASEM) summit in Vientiane, Laos, Nov. 6, 2012. Mr. Noda announced on the weekend his government’s intention to join the Trans-Pacific Partnership talks, creating what will be a key election issue for his struggling Democratic Party which must head to the polls before the summer.(DAMIR SAGOLJ/REUTERS)

Japan could soon follow Canada’s entrance into the Trans-Pacific Partnership
talks, adding significant economic weight to the potential free-trade pact that
could surpass the North American free-trade agreement in global importance.

A move by the world’s third-largest economy to join TPP makes the talks
aimed at creating a free-trade zone in the Asia-Pacific region even more
critical for Ottawa, which has made top priorities of diversifying Canada’s
trade partners and reducing dependence on the United States.

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The TPP framework discussions, whose next round is scheduled for New Zealand
in December, currently include countries comprising 658 million people and a
combined annual economic output exceeding $20.5-trillion. Some experts believe
the TPP talks could pave the way for a free-trade zone that would encompass the
entire Asia-Pacific region including China and boost global trade by 12 per
cent.

After ignoring the TPP for several years, the Conservative government of
Stephen Harper reversed course late in 2011, signalling its desire to join the
talks as it became clear they could lead to the creation of a free-trade pact
far larger than NAFTA.

A successful TPP agreement could boost Canada’s economy by as much as
$10-billion (U.S.) or 0.5 per cent of annual GDP and increase Canadian exports
by $15.7-billion or 2.6 per cent by 2025, according to a recent academic study.
If successful, trade liberalization and tariff reductions achieved by the TPP
could yield global income gains of $295-billion. Countries currently
participating in the TPP talks include the United States, Australia, Chile,
Malaysia, New Zealand, Peru, Singapore, Vietnam and Brunei. Mexico and Canada
were officially invited to join the talks earlier this year following months of
intense lobbying.

Japanese Prime Minister Yoshihiko Noda announced on the
weekend his government’s intention to join the TPP talks, creating what will be
a key election issue for his struggling Democratic Party which must head to the
polls before the summer.

In Japan, the possibility of joining the TPP talks has been a highly
divisive issue as it would likely force the lifting of protections enjoyed by
the country’s heavily subsidized agricultural industry.

While Japan’s agriculture industry and import restrictions are expected to
pose significant hurdles to membership in the TPP, Canada faces many of the
same challenges. Canadian dairy, egg and poultry farmers are protected by a
system called “supply management” which regulates supply and shields Canadian
producers from foreign competitors through tariffs ranging from 150 per cent to
300 per cent.

Ottawa has insisted it will not abandon the protections for these farmers
despite the fact that a condition of the joining the TPP talks is that members
must put everything on the table for negotiation.

The TPP is one of several international trade agreements Canada is pursuing,
including potential deals with the European Union and India. Mr. Harper was in
Asia last week, visiting India, the Philippines and Hong Kong in a bid to
boost trade and business interests in the region.

“We welcome Japan’s interest in joining the TPP. Japan’s participation in
the TPP would further strengthen Canada and Japan’s strong trade and investment
relationship. We are already working closely with Japan towards a bilateral
free trade agreement that will bring new jobs and increased prosperity to
Canadians and we would welcome the opportunity to also work together in the
TPP," Caitlan Workman, a spokesperson for the department of foreign
affairs and international trade, said in a statement.

News of Japan’s hopes to join the TPP come as Canada and Japan are set to
begin their first round of bi-lateral free-trade talks later this month in
Tokyo.

Japan is Canada’s fourth-largest export market. In 2011, Canadian exports to
Japan totalled almost $10.7-billion (Canadian). Leading exports included
mineral fuels and oils as well as agriculture and food products. Japan imports
almost 9 per cent of Canada’s total food exports and is Canada’s largest source
of business investment from Asia, at more than $12-billion in 2011.

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